Gold – 22 Feb

Gold confirmed the breakout from the recent flag pattern and closed strongly above resistance at 1760. The coast is clear for a run to the next resistance level just above at 1800. As price approaches that level it will have to do so with an RSI that is just now hitting the over-bought area at 70. Support is the 18 day moving average currently at 1738 and then the series of swing lows around 1710. In all likelihood we will see price stall out here at resistance and then consolidate some before we get consecutive closes above that level. Stochastic is not yet over-bought but is nearing that level with a reading of 72. I expect a swing high to be put in here near resistance then a slight pullback. Look for stochastic to continue higher and then embed (3 days above 80). An embedded stochastic suggests that momentum is increasing and nullifies the over-bought indication, pullbacks become buying opportunities as long as the stochastic remains above 80.

The expanded daily chart shows resistance waiting at 1804. The divergence in price and  technical studies between the two swing highs at 1767 was confirmed with the breakout. I always look for divergence and it is a powerful forecasting tool. The technical studies suggested the second swing high was stronger than the first and therefore the price should have been higher. Divergence often resolves the discrepancy, an in this case did so by reversing out of the consolidation flag and breaking higher. The Bollinger bands are very narrow and suggest that a break higher could really run for some time.  MACD is still at relatively modest levels and I see a move to the all time high in the cards.

The weekly chart shows price approaching resistance at 1800, which is also at the boundary of the lower trend channel. RSI has plenty of room to go higher with a modest reading of 59. Stochastic is just reaching over-bought territory and look for the embed. A very solid base has been built for a run to the all time high at 1925. MACD has only been this low once since 2008. This chart shows the potential for gold this spring.

The monthly chart is the saver’s chart. IMO, gold should be bought and it should be physical gold. This gold should be held until it is properly priced as at Freegold valuations. This is saving, not investing or trading. The monthly chart shows what has happened to gold as savings since 2001. One word, WOW! The force behind this chart is the death march of the US Dollar International Monetary and Financial System $IMFS. It will continue its parabolic trajectory until the system is redefined. Worrying about “the trade” is ridiculous. Simply hop aboard and enjoy the ride. The key average on this chart is the 18 month moving average where it has provided the support on all major pullbacks except for the 2008 correction. It did so once again at the 1520 swing low. Stochastic found support right where it was expected as well as RSI. The major corrections are shown as flag patterns. Notice how far price ran on the breakout each time. 50% higher for the first one after a 20% correction, 90% for the second one after a 30% correction. What do you think we will get after this last 20% correction?

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This entry was posted in Gold, Matrix Sentry TA, Technical Analysis. Bookmark the permalink.

One Response to Gold – 22 Feb

  1. Aquilus says:

    I always enjoy these updates enormously. As usual, thanks for sharing this work.

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